April 4, 2025 Update

Many investors are grappling with the question of, “Is it time to panic?” as the stock market experiences turbulence. Recently, the market outlook turned bearish due to the potential negative impact of new tariffs on growth and corporate profits.

These tariffs disrupt global supply chains, intending to discourage outsourcing and make American goods more competitive. However, companies like Apple, Nike, Ford, and General Motors face higher costs and reduced profits. Additionally, some targeted countries have placed retaliatory duties on American goods, sparking a trade war. We are pacifists when it comes to trade wars, in which everyone loses and nobody wins.

For most investors, the emotional impact of market downturns is significant. And can be especially stressful for recent retirees and those taking distributions. The fear and dread of losing portfolio value can drive the instinct to sell stocks. However, selling during a downturn can lead to missed opportunities when the market rebounds, as seen most recently during the COVID-19 pandemic.

Selling investments that are down significantly to fund cash flow can be detrimental. A diversified portfolio that includes cash, bonds, and alternatives can help protect your portfolio over the long term. During the 2000-2002 period, the S&P 500 fell about 55%, but having enough in other asset classes helped weather the storm, especially for those taking distributions, and allowed stocks time to recover.

During market volatility, your statement balance may cause concern, but looking at the details can be reassuring, as other investments may be performing well. This is why we emphasize diversification.

Predicting market movements is impossible. The markets have been generous but periodically reclaim some of their gains. The current tariffs have triggered another such period.

The American economy will navigate through this, and history suggests that the trade war will end. The key decision is whether to stick with a long-term investment strategy or abandon it due to short-term emotional distress. While anxiety is natural, it's crucial not to let emotions dictate financial decisions.

We are here if you need us. Please feel welcome to call anytime.

The Bond&Devick Team